Macroeconomic Factors and Household Debt in Selected Southeast Asian Countries

Abstract

High and growing household debt is a major economic issue in Asia, contribute to the increasing living costs, personal loans, and housing loans. This study aims to examine the macroeconomic factors contributing to the rise in household debt across seven Southeast Asian countries between 2011 and 2021. Five independent variables were tested: GDP per capita, working population, unemployment rate, inflation rate, and lending interest rate. These variables were analysed using the Panel Data Analysis method, applying a cross-section Seemingly Unrelated Regression (SUR), which included panel specification and diagnostic tests. The estimation results showed that all macroeconomic variables had a negative relationship with household debt, except for the inflation rate. For policy implications, government should develop appropriate strategies related to these macroeconomic variables effectively to manage household debt. While household debt is not harmful, it must be controled at a manageable level. Future research should explore further issues of household debt across multiple countries within specific regions to provide a deeper understanding of their broader impacts.